The ongoing U.S.-China trade drama pushes the DAX lower once more, with focus on MTU, Vonovia, and Fresenius. Here's the lowdown for investors.
Stocks in the DAX index suffer another steep decline, causing significant losses for shareholders of companies like MTU and Vonovia.
The escalating U.S.-China trade war has proved Yet Another Nightmare for the DAX on this fine Wednesday. Now, China decides to slap additional tariffs of 50 percent on all U.S. goods starting April 10. The grand total for these tariffs will amount to 84 percent, putting even more pressure on the U.S. goods imported to China. As of the U.S.'s response, the total tariffs on China imports currently stand at 104 percent. For more details, check here.
Currently, the DAX is down by a whopping 3 percent as compared to the day before, dwindling to 19,661 points. On the other hand, the European cousin of DAX, Euro Stoxx 50, is also experiencing a similar fate, plummeting 3.11 percent to reach 4,634 points.
The trade squabble between the U.S. and EU might intensify even more, casting a dark cloud over the global economy. The chances of a recession are starting to look increasingly likely.
Analyst, Jochen Stanzl from broker CMC Markets, recently penned down that the market isn't showing any signs of bottom formation or a clear effort to establish one. Stanzl suggests the possibility that the DAX might dip below 18,800 points in the coming days. Earlier in the week, DAX plummeted to 18,489 points only to experience a stabilization attempt.
DAX (WKN: 846900) - Highlighted Shares: MTU, Vonovia & Co.
No clear winners can be easily spotted in the DAX today. The shares of MTU, Vonovia, and Fresenius (among others) are currently lagging behind, losing 5.7 percent, 5.6 percent, and 5 percent respectively. The pharmaceutical and medical sector is under the increasing scrutiny of the U.S. government in terms of tariffs.
Real estate stocks like Vonovia also find themselves among the hardest hit. Initially, the sector reacted positively to the announcement of the U.S. tariff onslaught last Wednesday, as the first response on the bond market was favorable. Bond yields rose, and in turn, interest rates fell, which is good news for the debt-sensitive real estate values. However, this positive sentiment seems to have faded. The uncertainty on the bond market is due to the fact that the status of U.S. government bonds as a safe-haven for investors seeking a refuge from troubled waters is starting to crack. Trump's tariff package is giving investors pause and sparking concerns about inflation.
Additional Reading:
Nearing a Major Sell-off: Further Intensification of DAX, German Stocks, and Euro | Alternative Title: Horror Scenario for Stocks Becoming Increasingly Likely, Warn Analysts
- The escalating U.S.-China trade war has increased the likelihood of higher tariffs on U.S. goods imported to China, which adds to the pressures on the industry and finance business.
- Given the current situation, it is likely that the total tariffs on China imports will reach 84 percent as China plans to impose additional tariffs of 50 percent on U.S. goods from April 10.
- The ongoing trade squabble is not only affecting the German stock market, as the Euro Stoxx 50, the European cousin of DAX, is also experiencing a similar fate, plummeting 3.11 percent to reach 4,634 points.
- In the face of this Tariff-induced market uncertainty, analysts, such as Jochen Stanzl from broker CMC Markets, predict that the DAX might dip below 18,800 points in the coming days, with seemingly no end in sight for the ongoing trade drama.
